US top court rules for pipeline operator on penalty

* Reasoning of 2000 ruling applies now to criminal fines

* Southern Union guilty of illegally storing mercury

* At issue $18 million penalty by trial judge

By James Vicini

WASHINGTON, June 21 (Reuters) - The U.S. Supreme Court on Thursday overturned an $18 million penalty against a pipeline operator for illegally storing mercury, ruling a jury must determine any facts that increase a defendant's maximum potential sentence, even for a criminal fine.

A jury found Southern Union guilty of storing the mercury at a company building in Rhode Island without a permit. A federal trial judge then imposed a $6 million fine and $12 million in community service obligations.

Texas-based Southern Union argued the jury only found that the company had violated the law for at least a single day, which carries a maximum fine of $50,000.

Federal government prosecutors said the company had violated the law for 762 days. A U.S. appeals court ruled against the company and said the trial judge could determine the number of days of violation in calculating the penalty.

By a 6-3 vote, the Supreme Court overturned that ruling and sent the case back to the appeals court for further proceedings.

Justice Sonia Sotomayor wrote in the majority opinion that the Constitution's Sixth Amendment right to a jury trial required that the jury, rather than the judge, find any facts necessary to increase the fine imposed in a criminal case.

She said the Supreme Court used similar reasoning in a ruling in 2000 that a jury must find any facts that increase the length of a prison sentence. Sotomayor said the same principle applied to the imposition of criminal fines.

She rejected the federal government's argument that extending the 2000 ruling to criminal fines will prevent states and the federal government from adopting laws that calibrate the amount of the fine to a defendant's culpability.

Justices Stephen Breyer, Anthony Kennedy and Samuel Alito dissented.

In late March, Southern Union and Energy Transfer Equity LP announced the completion of their merger.

The Supreme Court case is Southern Union Co. v. United States, No 11-94.